10 Aug 2020
All Change as Virtual Shareholders Meetings Become ‘New Normal’ in Indonesia
With the Covid-19 pandemic having disrupted long established ways of doing things around the world, businesses and regulators have had to quickly adjust to the new reality.
In Indonesia, two regulations issued earlier this year by the Indonesian Financial Services Authority (Otoritas Jasa Keuangan / “OJK”) take cognizance of the changed circumstances by putting in place a solid legal framework to enable public companies to effectively and securely switch from physical to virtual general meetings of shareholders (“e-GMS”).
The two regulations are:
Under the new arrangements, a public company may hold an e-GMS via a system provided by an e-GMS provider. In addition, electronic proxies ("e-Proxy") may be granted via the e-GMS system.
However, an e-GMS must still be accompanied by a physical event that is attended, at a minimum, by (i) the meeting chairperson; (i) one director and/or one commissioner; and (iii) capital-markets support professionals that are required for the conducting of the e-GMS, such as notaries, auditors, etc. While shareholders continue to have the option of attending the physical event, the number doing so may be restricted on a first come, first served basis. In certain circumstances, as determined by the Government or based on OJK approval, it may not be necessary to hold a physical event.
An e-GMS may be organized and conducted using the eASY.KSEI platform provided by the Indonesia Central Securities Depository (PT Kustodian Sentral Efek Indonesia / “KSEI”), which platform was launched in early May.
Alternatively, an e-GMS may be conducted using a platform provided by an Indonesian-domiciled and incorporated third-party provider that is approved by the OJK, or via the company’s own e-GMS platform, provided that in both cases the platform is inked to the systems operated by the KSEI and the company’s stock registrar.
The virtual attendance of a shareholder at an e-GMS constitutes their physical presence for legal purposes, and thus they will be included in the attendance list for quorum purposes. A shareholder who is present virtually but who does not cast their vote on a particular motion will be deemed to have voted with the majority.
As regards e-Proxies, it is now mandatory for a public company to provide an e-Proxy system as an alternative means for shareholders to appoint proxies. This may be done via either the e-GMS provider's platform or the company's own e-GMS platform. Should a shareholder opt to avail of e-Proxy, they should also indicate their vote for each item on the GMS agenda.
While many have pointed to what they see as a slow response by the Indonesian Government to the Covid-19 pandemic from the public-health perspective, the same cannot be said about the Government’s legal response. It acted with alacrity to put in place an overarching legal framework through the issuance of emergency legislation (Perppu No. 1 of 2020) that provides new powers to various state agencies and regulators, including the OJK, to combat the economic fallout of Covid-19. Many of the changes introduced using these powers will continue to benefit Indonesia long after the pandemic has receded.
Given the apparent ease with which changes to established ways of doing things have been introduced, one cannot help wondering why at least some of them were not made prior to Covid-19? The permitting of Virtual shareholders’ meetings is a classic example of something that is long overdue, particularly in an archipelagic nation like Indonesia, where distance can be a real disincentive to shareholder participation. As shareholders can virtually attend an e-GMS from wherever they may be, this will hopefully boost the current low level of retail-shareholder participation in public companies, thus potentially improving accountability and transparency.
Should you have any queries or require legal advice on how you can best protect your interests during this time of uncertainty, please contact any of the persons below, call us on +6221-2505125, or email us at firstname.lastname@example.org.
Mr. Emir Nurmansyah (email@example.com)
Mr. Nafis Adwani (firstname.lastname@example.org)
Mr. Agus Ahadi Deradjat (email@example.com)
 OJK Regulation No. 15/POJK.04/2020 on the Planning and Conducting of a Public Company’s General Meeting of Shareholders (Peraturan Otoritas Jasa Keuangan Republik Indonesia Nomor 15 /Pojk.04/2020 Tentang Rencana Dan Penyelenggaraan Rapat Umum Pemegang Saham Perusahaan Terbuka)
 OJK Regulation No. 16/POJK.04/2020 on the Conducting of a Public Company’s GMS by Electronic Means (Peraturan Otoritas Jasa Keuangan Republik Indonesia Nomor 16 /Pojk.04/2020 Tentang Pelaksanaan Rapat Umum Pemegang Saham Perusahaan Terbuka Secara Elektronik)
 Government Regulation in Lieu of Law No. 1 of 2020 (Peraturan Pemerintah Pengganti Undang-Undang Nomor 1
Tahun 2020), which has now been ratified by the House of Representatives (Dewan Perwakilan Rakyat / DPR) as Law No. 2 of 2020.
This edition of ABNR News and the contents hereof are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained herein. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law